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Bloomberg
Alibaba Group Holding Ltd., China’s e-commerce giant, plans to invest about $200 million in India’s largest online supermarket, Bigbasket, leading a $280 million funding round in the startup, according to people familiar with the negotiations.
Alibaba is taking a stake of about 25 percent in Bigbasket after months of negotiations, said the people, asking not to be identified because the matter is private. The Bengaluru-based grocery business had previously been in talks for an investment from e-commerce pioneer Amazon.com Inc., which in June agreed to acquire US grocer Whole Foods Markets Inc.
The investment marks an escalation in the competition between the world’s two largest e-commerce companies in India, one of the world’s fastest-growing—and as yet unconquered—online retail markets. Amazon founder Jeff Bezos has vowed to invest $5 billion in the country as he challenges local leader Flipkart Online Services Pvt. Alibaba has invested in One97 Communications Ltd., which runs digital payment and e-commerce businesses.
The Bigbasket deal is awaiting approval from the country’s antitrust authority, the Competition Commission of India, the people said. That is now seen as a formality and should come through any day, one person said.
Bigbasket and Alibaba did not respond to emails seeking comment on the new funding.
The deal values Bigbasket, a purveyor of groceries and household needs like toothpaste and freshly-ground spice powders, at $800 million. An affiliate of One97’s Paytm E-commerce Pvt may join Alibaba in its $200 million stake with a small investment, the person said.
Grocery and daily essentials is a challenging business the world over, even in advanced markets like the US and China. Bigbasket, owned by Innovative Retail Concepts Pvt, operates in a country where expansion is difficult beyond the biggest cities because of rudimentary logistics and a shortage of refrigerated trucks and warehouses.
Growth will require capital expenditures, and Amazon got government approval earlier this year to invest $500 million into food retailing. Several high-profile grocery startups have collapsed in the last couple of years in India.
At the same time, online retailers can build loyalty and push high-margin private labels and fresh produce to buyers in the e-commerce segment that sees the highest repeatability.
Bigbasket company now delivers in over two dozen Indian cities and offers 18,000 products from over 1,000 brands. Its existing backers include the Dubai-based Abraaj Group as well as Sands Capital.